A miserable day for the home team as the SPX advanced 15.84 points yesterday to close at 1139.93. TOT daily traders went 300% short at SPX 1133 on Monday, another 100% short at SPX 1123 yesterday, and have held the position overnight since then and into today.
Since initiation of this service on September 30, 1993, our daily trader recommendations have gained 8321.84 cumulative SPX points compared to a gain of 681.00 points in the index itself over the same period.
The super long term perspective for the stock market remains bearish, and it’s unlikely anything will change that for several years.
The long model remains neutral, and the short term model remains bearish.
There was no REAL reason for the sharp advance yesterday, although the talking heads tried to curve-fit answers on their evening news wrap-ups. More honestly though, was the 11:30 a.m. commentary from finance.yahoo.com which said, candidly, “It is hard to say what exactly spurred the rapid advance, but it is fair to say that buy programs and short-covering probably had their hand in this… The market’s ability to bounce back from its initial losses prompted traders to cover their positions, which helped launch the indices to new highs.” The Wall Street Journal, in their 1:20 p.m. commentary, said, equally candidly without making up b.s. reasons, “Investors seemed to have a sudden change of heart,” without trying to explain why.
In truth, markets do change direction on a dime and without reason, from time to time. It’s similar, in certain ways, to expressway traffic. We’ve all gotten stuck on the highway for no apparent reason, inching along at 5 miles an hour, and then, all of a sudden, the road just opens up – without any sign of an accident or anything else that might have caused the congestion – or for that matter, any sign of what might have cleared it. Basically, in the words of the vernacular, sh-t happens!
The daily model is again bearish today, and we will maintain our previously established stop. As was the case yesterday, maintain the protective buy stop at SPX 1143 on the entire position. If not stopped out – which seems unlikely considering the preliminary response to the after-the-close Microsoft news – carry your position over the weekend and into Monday.
Have a great weekend (remembering that yesterday’s reversal is nothing more than one of the “one steps backward” that I described in the April Monthly Turov on Timing), thanks for the opportunity to be of service, and I’ll email you again in 72 hours – or sooner if circumstances warrant.
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